Cinderella investors will have their ball
By Paul Mackintosh - 26/08/13
Over in Europe, the message seems to be “never say die”. Subsets and regional implementations of the private equity that seemed destined to extinction or to the slow death of the zombie fund (or closed fund) are now showing fresh bursts of renewed vigour. Above all, European buyouts.
CVC Capital Partners especially seems to be enjoying quite a renaissance. In July they closed their latest buyout fund at €10.5 billion (US$13.8 billion), Europe's largest leveraged buyout (LBO) fund close since the global financial crisis (GFC), some 90% of it reportedly from repeat investors. And within the past couple of weeks, it has made three sizeable UK and European transactions: the US$800 million purchase from Investcorp of a majority stake in British online payment company Skrill Group Plc, the $1.2 billion acquisition of UK home-appliance warranty provider Domestic & General Group from Advent International, and the commencement of exclusive negotiations to buy the European brands of Campbell Soup.
This follows an equally sizeable investment by CVC in April this year, with the €3.1 billion ($4.2 billion) acquisition of German energy metering group Ista from Charterhouse Capital Partners, ostensibly Germany's largest buyout since 2008. And in May they took Belgian postal group Bpost public in an IPO that valued the asset at €2.9 billion.
So CVC appears to be firing on all cylinders, with fundraising, investments and exits. Even if all four of its big European deals so far have been secondary buyouts, acquiring assets from other general partners (GPs), it's unlikely that its limited partners (LPs) object. CVC was able to ace its latest fundraise on the strength of its track record, and whether primary or secondary, it's likely that its investors are expecting it to be able to do the same again.
CVC has had a tough time in Asia Pacific since the crisis, with its difficulties typified by its Seven Group Australian media investment. But there too, things seem to have turned around with its successful exit from its pioneering Matahari Indonesian retail investment.
And this all ought to be music to a savvy private equity investor's ears. The asset class is supposed to be all about the long game, after all, with wise GPs and LPs alike realising that even the most severe cyclical dips will pass, and that high returns come from staying the distance, and having faith in your platform and your thesis. Events seem to be bearing that out, and Cinderella investment styles are putting on their glass slippers and getting ready for the ball. Now who's for European venture?